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Late on Wednesday, Coty announced that it had sold around 57m shares priced at $17.50 in its flotation, valuing the company at $6.7bn in an IPO that raised about $1bn.

Coty, founded in Paris in 1904 by Francois Coty, said it would not receive any proceeds from the share sale. Joh. A Benckiser, the wealthy Reimann family's closely-held investment company which owns around 82pc of Coty, offered 43.6m shares.

This afternoon has certainly proven that theory with strong buying being seen across the board.

The markets will now wait with baited breath for Bernanke’s next comments next week. The Fed minutes may well show investors that they have read too much into comments made by the Fed in what was only originally intended to stop the rally from spiralling out of control.

16.43 After this morning's gyrations, a positive start to trading in the US has helped steady the ship in London, with the FTSE 100 managing to close up 5.18 points at 6,304.63, snapping three days of falls. Ishaq - quoted in the previous post - notes:

Market volatility remains uncomfortably high on fears of reduced liquidity from global central banks together with slowing global growth. Risk aversion dominates the mood despite the improvement in stocks. Other than equities, risk sentiment for other assets continues to deteriorate; German government bonds are still in favour while commodity prices remain weak. EUR/USD and cable are have also incurred losses but Japan’s yen remains firm.

16.29 Heading into the close in London, Ishaq Siddiqi at ETX Capital said:

European markets have pared session losses, supported by firmer prices on Wall Street though European bourses still look set to post the fourth straight day of losses.

...

Judging by the reaction to US data since Fed head Bernanke’s testimony on May 22, markets respond in an adverse manner to data indicating a US recovery and favourable to data suggesting the otherwise. This afternoon however, stock markets have responded better to good US economic data but that’s not a sign that nerves over tapering are easing.

No, instead it’s a telling sign about stock market traders who are opportunistic creatures, using this week’s selloff as an excuse to snap up some battered stocks. This afternoon’s price action is likely to set the tone for Friday’s European session given that we don’t see a further slide in the US and Asian session later today and early Friday.

16.13 Although the International Monetary Fund on Wednesday approved the disbursement of the next tranche of aid to Portugal, it warned today that the country's economic outlook remained "sombre". The IMF cautioned too that the political and social consensus behind Portugal's bailout was fraying.

In its report on the country, the IMF said that "outlook for public debt remains very fragile" due to the higher than expected budget deficit and because of a worse economic outlook.

Portugal forced the sharpest tax rises in living memory this year as the government seeks revenues to plug the deficit. Unemployment at 18pc is the highest on record, although less that in some other bailed out eurozone countries.

15.51 At 14.59, we mentioned the protests in Greece today over the shutdown of the country's state broadcaster. Here at Telegraph Towers, we've put togethera picture galleryof some of the best snaps from those protests.

Meanwhile, the Guardian's Lisa O'Carroll reports that some of ERT's services are now being broadcast into people's homes by satellite:

15.29 At 10.30am this morning I asked you to cast your vote in our poll on whether or not the slump in global markets is a correction, or if it was simply a normal patch of volatility.

A fairly overwhelming amount of you do think this is a correction.

Some 431 cast their votes and it has just closed so I can now share those results with you:

If you agree, or disagree, please do comment below. Makes for very interesting reading.

15.13 Italy has said it will "absolutely" meet its pledge to the EU to keep its budget deficit below 3pc this year.

"Yes, absolutely," economy minister Fabrizio Saccomanni told reporters in Rome when asked if the government's 2.9pc goal, just a notch under the EU ceiling, would be met. He added that he had "already reassured the ECB."

The European Commission recommended last month that Italy be taken off its list of countries with excessive budget deficits, but it risks being put straight back on in 2014 if present trends are not reversed.

Former economy minister Giulio Tremonti, who kept a tight rein on public finances, forecast this week that without corrective measures the deficit would hit 4pc this year.

Italy's public debt, at an estimated 130 percent of GDP this year, is the second highest in the euro zone after Greece.

Rome, Italy

14.59 Over to Greece, where the nationwide strikes are continuing over the government’s abrupt closure of state broadcaster ERT.

Greek Prime Minister Antonis Samaras has been forced to try to defuse the situation. He has invited two left-wing junior coalition parties opposed to the shutdown to talks next Monday. Samaras is said to be open to discussion but is unlikely to back down.

Athens has described the 75-year-old broadcaster's shutdown as a temporary measure pending the relaunch of a slimmed-down station. About 2,600 employees are to lose to their jobs, though the government has promised to compensate them.

City buses did not run in Athens and train services halted across the country after Greece's two biggest labour unions staged a 24-hour strike.

An indefinite strike by a journalists' union prevented some newspapers appearing and forcing private broadcasters to air reruns of sitcoms and soap operas instead of the news.

ERT is the sole broadcasting lifeline for residents of remote islands.

It is financed with about €300 million of mandatory fees raised through electricity bills, regardless of whether the household has a television set or not.

The average household pays about €50 euros a year, but the fee will be suspended while ERT is shut. Athens estimates annual savings from the downsizing at about €100 million.

Thousands of protesters participate in a rally outside the Greek public television ERT headquarters

More protesters outside ERT

Greek state television presenter Stavroula Christofilea, presents a news bulletin broadcast through the web in the studio of ERT headquarters

14.45 While it was a fraught start to trading in the UK, it's been slightly calmer in the US, where the Dow Jones Industrial Average is off just 0.1pc.

14.37 The trade battle between the European Union and China has taken another turn.

The EU has launched a complaint at the World Trade Organization to challenge China's imposition of anti-dumping duties on imports of stainless steel tubes, the EU said on Thursday, six months after a similar complaint by Japan.

In a statement the EU said:

The EU believes the anti-dumping duties are incompatible with WTO law, both on procedural and on substantive grounds.

The duties of 9.7pc to 11.1pc imposed on European products are significantly hampering access to the Chinese market.

The latest spate comes after several disputes between the EU and China.

It started when the EU imposed hefty duties on the import of Chinese solar panels. China then launched a trade inquiry into sales of European wine.

It has also been reported that China is looking into a complaint about luxury cars imported from the European Union.

China responded to EU anti-dumping tariffs on solar panels with a levy on European wine

14.10 Mixed economic data is helping the FTSE 100 rally now. Having fallen as much as 1.5pc, the benchmark index is now only down 0.2pc. Dealers are likely to follow the lead of US markets when they open in less than half an hour, so the start of trading in America will be closely watched.

14.01 There are also jobless claims numbers out in the US, which are also better-than-expected, and could spark more fears that the Fed will pull back on its monetary easing sooner rather than later. Will be keeping a watchful eye on markets.

13.43 Over in the US retail sales figures are out and they are better-than-expected, boosted by a rise in the sale of cars.

Retail sales rose 0.6pc in May, compared to a 0.1pc increase in April, according to the US Commerce Department.

Economists polled by Reuters had expected retail sales, which account for about 30pc of consumer spending, to rise 0.4pc last month.

Reuters reports:

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, increased 0.3pc after rising 0.2pc in April.

Coming on the heels of data last week showing a steady pace of job gains and a jump in consumer confidence, the retail sales report hinted at underlying strength in the economy, despite belt-tightening in Washington, which is weighing on factories.

Sales rose in most categories, with receipts at auto dealerships rising 1.8pc - the biggest increase since November - after advancing 0.7pc the prior month. Excluding autos, sales gained 0.3pc after being flat the prior month.

Madison Avenue – 20 city blocks lined with chic boutiques and the most glamorous names in fashion

13.28 Lunchtime update on European markets.

They have managed to regain some of the losses in earlier trading, but mostly remain in the red.

The FTSE 100 is down 0.7pc, the CAC is down 0.5pc, the DAX is down 1.6, the Ibex is down 0.9pc, while the FTSEMib in Italy is up 0.2pc.

FTSE 100 in Thursday's trading

12.59 The Parliamentary Commission on Banking Standards is expcted to publish is final report shortly.

The Commission was appointed by the House of Commons and the House of Lords to consider and report on:

• professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process

• lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy

It will then make recommendations for legislative and other action.

Headed up by Andrew Tyrie, the Commission has spent months and months talking senior people involved with the banking sector past and present.

The wait for that final report is nearly over. The final report was agreed formally last night and has been handed to the House.

However, there has been no word yet as to when it will be published. Stay tuned.

12.21 But our own financial editor James Quinn does not think Sir Philip is on his way out.

If you had asked me on Tuesday, I would have said Hampton would go before Hester, perhaps this year or next.

But given the new reality RBS finds itself in, Hampton is going nowhere soon. In a share-sale process, a chairman is just as important as a chief executive. Potential investors want a strong figurehead they can rely on to steer the board.

Although Hampton may want to depart at some point, given what has happened to Hester, he will be very much in place for a good number of years.

12.18 And that's where it ends. Not really sure that we learnt anything new from that session.

They report that he is likely to step down following an interview with Bloomberg TV where he said that "when we have a new CEO, other aspects of board succession will be addressed” and that chairmen usually serve between five and seven years. He has been in the role for almost five years.

Asked whether he would quit, given the level of government interference in the business, he replied:

The focus here is on the executive team. They drive business forward. That’s why it’s right to drive it. My position is significantly less important.

RBS chairman Sir Philip Hampton

12.09 An MP asks is it not better for the government to keep hold of its stake in RBS and use it to push investment.

Javid responds concisely:

The Government has no role in owning any part of the banking sector.

12.05 Lots of questions being repeated, mainly asking where is George.

11.58 Questions pushing for more details on Osborne's involvement in Hester's departure.

Javid responds:

This is a decision for the board of RBS, which is a commercial organisation.

But because it’s a commercial organisation where the state is majority shareholder, of course when RBS makes a big decision, it will of course inform the government.

Textbook politician answer that.

11.54 Our financial editor James Quinn is also listening and tweets

&lt;noframe&gt;Twitter: James Quinn - Javid tries to insist Dec 2014 deadline mooted by Hampton is not the deadline for RBS privatisation, but will stick in minds whatever&lt;/noframe&gt;

11.52 Pat McFadden, who sits on the Parliamentary Commission on Banking Standards, says Hester did a good job at reducing the bank's balance sheet and turning the bank around.

But it was not complete when the timing of his enforced departure came around. So I want to hear more on the timing and strategy of returning the bank to the private sector.

Javid says, using Hester's words from last night - that he has got the bank to where it can be privatised and that is the end of his journey, because he could not commit to stay on through the privatisation process and further on, which the board felt was need.

11.47 Javid confirms what Hester said this morning which is that Hester and Osborne did not meet prior to the announcement of the chief's departure.

This is a decision for RBS and its board.

They have made a decision jointly with Stephen Hester and have come to a voluntary agreement.

However, he does confirm that RBS chairman Sir Philip Hampton did request a meeting with Osborne last week to inform him of the board's decision.

11.43 Sajid Javid says Osborne isn't there because he is instead.

And what I would ask is, where is your boss then? Shouldn't the shadow chancellor be here if he thinks it is so important?

11.39 Shadow Treasury minister Chris Leslie is now up from the opposition.

Asks a lot of questions - why isn't George Osborne here, will they say what Osborne said to RBS board, is Hester's departure at the end of 2013 just fitting in to Osborne's pre-lection campaign.

Why hasn't the chancellor come to parlaiment to set out what is obviously achange of policy?

Shouldn't the Chanellor set out his plans to this house and not to the Mansion House first?

11.38 He says that now RBS has been brought back from the brink it is time to move to a UK bank that "provides greater support" to the British public and to businesses.

11.34 Just going over what Hester will financially receive when he leaves.

He confirms he could receive as much as £5.6m on his exit, including £1.6m in lieu of notice, equivalent to 12 months' pay and benefits.

He will also be eligible for unvested options through his long-term incentive plan, which could be worth more than £4m based on the bank’s current share price. He will not be eligible for a bonus for 2013.

Points out that Hester has only taken one bonus out of a possible five available to him.

11.31 Says it is "reassuring" that Hester is staying on for handover and adds:

He has made an important contribution to Britain’s recovery from the financial crisis.

11.29 Treasury statement now being given to Parliament by economic secretary to the Treasury, Sajid Javid.

He said

Stephen Hester brought it back from the brink and has worked to make it a safer bank.

In it he said RBS "nearly died" as it lost sight of why it was founded.

Nothing about this decision was easy, but I can see that as we head towards a potential privatisation, now provides a window for the company to put in place a Chief Executive that can give fresh energy to the challenge of leading RBS through the next phase."

I joined RBS at its lowest point. We were a company close to the point of collapse with no clear path back to recovery

...

All the odds and much of the opinion was against us, but your efforts and strengths proved to be the biggest asset in ensuring we could recover the business for everyone who relied on us.

...

RBS lost sight of why it was founded, and it nearly died as a result. We’ve got back to a place where we can once again focus on the customer above all else.

11.10 While most companies on the FTSE 100 have fallen, Rolls-Royce has lost more ground than most. A cut to "sell" at Espirito Santo has hurt shares in the aircraft engine-maker, sending them down 2.7pc. Analysts at the broker said:

Rolls-Royce has good long-term revenue growth and a good record of meeting or beating EPS expectations. However, with cash conversion entering a weaker phase in our view, and with the P/E ratio at a 10-year high, we are maintaining our Fair Value at 950p, but reducing our rating to Sell

Rolls Royce engine

10.52 Following speculation that the Treasury had a hand in Stephen Hester's departure from RBS, Labour tabled an urgent question.

Parliament has now confirmed that economic secretary to the Treasury, Sajid Javid, will make a statement to the House of Commons on RBS between 11.15 and 11.30am, so plenty of time to grab a cup of tea before it starts.

I will be covering it live in the blog.

10.30 Thank you for all your comments so far. There is an interesting debate going on as to whether or not this dip is markets is simply just investors taking profits and is a normal dip, or if this is something more severe and the start of a correction.

10.22 Shares in asset management firms have been hit by the broader fall in stock markets. Aberdeen Asset Management is off 3.9pc and Schroders has slid 1.9pc, with the wider FTSE 100 1.3pc lower.

10.17 On a more serious note....quite a few analysts have been praising Hester for his time at RBS (see 09.00).

Mike van Dulken, head of research at Accendo Markets, says he has done a "stellar" job in his almost five years at the bank.

He’s done a stellar job in slimming down the bulging bank he inherited from the disgraced acquisition-maniac Fred Goodwin, and the recent return to profitability was a welcome milestone.

...

Hester has weathered much criticism on pay - his exit payslip may see more - but he stayed the course under tough conditions and likely doesn’t need much convincing to move on.

Leaving the bank in a far better state than he received it, after Fred took the biscuit Stephen should take the title - good luck Sir.

Former RBS chief Fred Goodwin

10.09 Hold the front page....Stephen Hester has a new job already. After weeks of speculation as to who will be the new Dr Who, The Daily Mash is reporting that the wait it over.

A BBC spokesman said: “”As soon as we heard he was leaving it was a no-brainer, we had to get Hester.

“Like RBS, Doctor Who is a publicly-funded venture that has run into choppy waters. Yes he’s costing us more than Tom Cruise but we need a solid, balding alpha male who is totally the opposite of these foppish emotionally-incontinent Doctors.”

09.51 Sticking with currency, the dollar has fallen to a 10-week low against the yen, which has continued to strengthen, The cross dropped 1.9pc overnight to 94.21.

The Bank of Japan's measures had made it a one-way trade to buy Japanese equities and sell the yen. But the Nikkei's recent slide, on uncertainty over Federal Reserve stimulus, has led foreign investors to unwind hedges taken out to benefit from rising stocks and not be hurt by a weaker yen.

The yen's gains also reflect uncertainty that the aggressive policies of Japanese Prime Minister Shinzo Abe can boost the economy and stave off deflation partly via a weaker currency.

On the other hand the dollar fell broadly as investors slashed hefty bets on gains in the US currency, taken out on expectations the Fed would soon scale back monetary easing. Such bets are close to their highest since at least June 2008.

• The yen tends to strengthen when the Nikkei falls (the NKY fell more than 6% today).

• The yen has strengthened alongside a drop in Japanese government bond yields. Interestingly, the yen weakened when yields rose, suggesting that the Japanese currency has an inverse relationship to yields, which is typical behaviour of safe haven FX.

• But we are in a chicken and egg situation: a stronger yen darkens the corporate outlook that could weigh on the Nikkei, which pushes the yen higher… Right now there does not seem to be anything that can break this negative circle, so we may see further yen strength.

Source: Bloomberg and FOREX.com

09.38 There is just one euro/dollar chart that all traders should see, according to Forex.com's Kathleen Brooks.

While the EURUSD has hit a three-month high, approaching 1.3400, the chart below suggests it is built on "shaky foundations", she says.

It shows the interest rate differential between German and US 10-year government bond yields and EURUSD.

EURUSD has diverged from bond yields in recent weeks and Kathleen thinks we should be worried for three reasons:

• Yield is a key driver of foreign exchange, so when a currency diverges from yield it can be a major warning sign for traders.

• Right now the market is focused on policy normalisation, particularly from the Fed. So, interest rate differentials should be a highly tradable theme for the markets in the coming months.

• The last time we saw EURUSD diverge from rate differentials was in June 2012. Back then the yield differential was EUR positive, yet EURUSD was declining. Within 1 month EURUSD had strengthened and moved back in line with the yield differential. Could the same happen this time?

She adds:

When EURUSD diverges from the German-US rate differential it can be a warning sign. Watch out for a bearish reversal in EURUSD. A break of 1.3260 suggests a sharper decline could be on the cards.

Source: FOREX.com and Bloomberg

09.28 Japan's central bank governor believes the fall in markets is just a result of investors taking profits.

Bank of Japan Governor Haruhiko Kuroda told a meeting of cabinet ministers that profit taking by investors was one factor behind a plunge in Tokyo share prices, the top government spokesman said on Thursday.

Chief Cabinet Secretary Yoshihide Suga also quoted Kuroda as telling the meeting that the real economy and leading indicators showed the economy moving in a direction as targeted by policymakers.

The Nikkei 225 closed down 6.35pc at 12,445.38 on Thursday.

09.25 The fear of central banks pulling their supportive monetary policy away has not just hit equity markets, but bond markets as well, leading to borrowing costs reaching new highs.

While equity markets are bouncing around, directionality is not an issue in the bond market, says Antypas Asfour, FX strategist at IronFX.

With the prospect of central banks stepping back from loose monetary policies, bond yields have rocketed to new highs.

The yield on the U.S. 10yr note yesterday spiked to a 14-month high of 2.23pc, but it is emerging market borrowing costs that have soared the most since emerging sovereigns also suffer from their risk-off nemesis.

09.16 We all remember the Libor manipulation scandal. Well the next one could be related to the foreign exchange market.

A spokesperson at the banking regulator, the Financial Conduct Authority (FCA), has said that it is holding talks with "relevant parties" over allegations of foreign exchange market manipulation by banks.

AFP reports:

"The Financial Conduct Authority is aware of these allegations and has been speaking to the relevant parties. However, we can't comment further at this time," an FCA spokesman told AFP.

The Financial Times, citing sources, said the FCA had requested information from several banks with large London foreign exchange businesses following allegations that lenders had traded ahead of customer orders and attempted to manipulate benchmarks.

Citigroup and Deutsche Bank, the two largest players in the foreign exchange market with a combined market share of about 30 percent, are among the banks which have been asked for information on the matter.

However, there was no suggestion that the two banks were being specifically targeted, the business daily added. The FCA would not confirm any names.

The development meanwhile comes as the European Commission is shortly expected to present proposals to tighten up oversight of key financial market benchmarks, especially of interest rates, in the wake of last year's Libor interbank rate-rigging scandal.

09.00 Stephen Hester got trussed up like a chicken and roasted. That is according to David Buik, market commentator at Panmure Gordon, who says the outgoing chief never had a chance.

When you have the might of the Government, UKFI, The Vickers Committee, the Treasury Select Committee, Banking Standards Committee, the FSA and the Bank of England pushing you around unceremoniously when you never even asked for the job, what chance did Stephen Hester have of finishing the job in the manner we all hoped for? – Returning it to the taxpayer in rude health! Hell had a better chance of freezing over. It’s been a poisoned chalice.

...

I think Mr Hester has been scurrilously treated. Along the way there have been a few blips – technological fiasco and bonuses, but I think he has behaved with the utmost integrity and propriety. As for his severance pay and shares the taxpayer has had a snip in comparison to the real cost in a commercial environment.

08.53 Shares in Petrofac and RSA Insurance are the only risers on the FTSE 100 this morning. The oil services group, up 0.3pc, has analysts at Citigroup to thank for its outperformance, with experts at the broker upgrading their recommendation to "buy" from neutral". RSA, also 0.3pc higher, has impressed a number of brokers with a presentation last night on its Canadian business

08.41 RBS has now released the latest plan for its market division (07.56).

The state-backed lender says it plans to focus on its fixed-income capabilities.

It will exit all structured retail investor products, which it said were "capital intensive or costly to run" and equity derivatives.

The statement said:

Our aim is to streamline the business, reduce complexity, mitigate operational risk and improve the way in which we manage our activities front-to-back.

It will concentrate risk management in four main trading hubs - London, Stamford, Singapore and Tokyo.

No confirmation on the number of job losses, although they do admit there will be some.

Regrettably, there will be job losses in areas that we are exiting or streamlining and it may take some time before we can provide clarity to those affected.

Shares in the bank are now down 6.5pc.

08.31 Investors appear to have calmed down a touch, with the FTSE 100 making back some ground and now down 1.2pc. Here are the thoughts of Ishaq Siddiqi, market strategist at ETX Capital, on the falls seen this morning:

A rout across global stock markets on heightened fears that global central banks will halt/moderate liquidity measures forces investors to dump risky assets. US stocks fell overnight on these worries and Japan’s Nikkei 225 index slumped 6.4pc into bear-market territory, pushing the yen higher against the US dollar.

An ugly start for European stock markets which are on course to book a fourth straight day of losses. Risk aversion dominates with a flight into core government bond such as German bunds out of equities, currencies like the euro and commodity linked currencies, emerging markets and commodities. Additionally, investors have been rattled by the recent developments in Greece as the country failed to dispose of a big ticket asset, switched off state-TV in what was seen as an austerity drive and had its status cut to emerging market from developed market by MSCI.

08.29 Kate's Swann-song at WHSmith is a rather downbeat one. Like-for-like sales fell across the board at WHSmith last quarter, with same-store sales down 6pc in the 14 weeks to June 8 compared with the same period last year. High street sales fell 7pc on a like-for-like basis.

WHSmith said this reflected last year's strong publishing schedule, which included the release of the sequel to EL James' Fifty Shades of Grey.

The chief executive of WHSmith leaves the retailer at the end of the month.

Kate Swann

08.27 Argos owner Home Retail Group has reported higher sales growth for the last quarter on the back of strong sales of consumer electronics, as well as big-ticket items at Homebase.

Like-for-like sales at Argos, where one in five of all TVs are sold in the UK, rose 1.9pc in the 13 weeks to June 1, while same-store sales rose 1.4pc at Homebase. However, analysts had expected sales to rise 3pc at Argos.

08.24 Time for a quick round up of some corporate news out this morning.

Europe's economic malaise and rising material costs hit profits at luxury brand Mulberry last year. Pre-tax profits fell by 82pc to £26m in the year to March 31, while revenues fell 2pc to £165.1m. The company is having a tough time in Europe, where it generates 80pc of sales, and is trying to shift its focus to Asia and America to drive future growth.

The results come just three days after creative director Emma Hill, the brains behind its bestselling Alexa handbag, announced her resignation.

Mulberry's handbags include the 'Alexa', named after Alexa Chung

08.18 The FTSE 100 could fall all the way back to levels seen in 2011, according to Mike van Dulken, head of research at Accendo Markets.

He said the drop to 6210 already surpassed his expectations of how far it would fall.

He believes it is now possible the main index could fall further to 2011 highs of 6140, which would be a fall of 10.7pc from highs seen in May, or possibly even further down to 6050, a 12pc fall from its 2013 highs.

The sell off from the May 22 high, although interspersed with a few upticks, is set to continue as the thought of a world without quantitative easing makes markets shudder. Despite some better than expected data from Europe yesterday, their impact was almost irrelevant given the uncertainty surrounding the longevity of stimulus measures from central banks. Overnight US markets closed on their lows and Asian markets are once again taking a hammering led lower by Japan which is all set to weigh on the European open.

The FTSE 100 is now down 1.5pc, or about 92 points, and the mid-cap FTSE 250 is off 1.6pc.

08.05 The FTSE 100 has tumbled 1.2pc at the open, a fall of 75 points to 6,224, following both the Nikkei 225 and the Dow Jones Industrial Average lower overnight. Following news that chief executive Stephen Hester is leaving RBS, shares in the bank are off 4.5pc, the heaviest blue-chip faller.

The World Bank's worries over growth has hit miners, with BHP and Rio Tinto both sliding 2pc.

There are only two risers: Petrofac (+1.7pc) and insurer RSA (+0.17pc)

07.56 RBS' outgoing chief Stephen Hester has just been speaking on BBC Radio 4's Today programme.

There has been speculation that his departure follows Treasury speculation but he told the BBC that he had not spoken to George Osborne for months, and played down talks of a rift with the government.

I want to dispel any issue around this - I'm not being prised out and I'm a very willing participant in the handover of the bank.

He also confirmed reports that there would be job cuts announced today in the bank's market division, but did not place a number on it -reports claim the lender will reduce the headcount at it investment bank by further 2,000.

The banker would not be drawn on the timing for privatisation of RBS, saying the faster it happens, the better for the government.

However he believes it will take a number of years for the whole stake to be sold because the state owns such a large part of the bank.

The fast privatisation can start, in my view, the better.

The amount of shares that the government owns is so great that it may take a couple of goes to sell them.

...

The bank is close to being in a state that can be privatised.

We are back to being a normal bank from being a bust bank.

However, he noted that the role of the government and what they want from the privatisation could affect when it happened.

If the political test goes further than that and says the share price has to be x or y, that's beyond what the bank can do.

I can't guess where the share price will be in a year but the bank will be in very good shape.

He added that he was "not feeling bent out of shape" about the board's decision for him to leave.

Half of me will be delighted to have it over, but the other half, I would like to be in the trenches with my people to finish it off.

It said the economy should expand more slowly this year than last as it cited a deeper-than-expected recession in Europe and a recent slowdown in some emerging markets.

In its twice-yearly Global Economic Prospects report, the bank warned that large developing economies, which have driven global growth in recent years, will not experience the same boom as they did before the global financial crisis and will have to focus on structural reforms to keep expanding.

The bank forecast the world's gross domestic product will grow 2.2pc this year, slightly below last year's growth of 2.3pc. In its last forecast in January, the World Bank estimated the world economy would expand 2.4pc this year.

Andrew Burns, the report's lead author, said the global economy should be less volatile in the future, but growth should slow.

The World Bank estimates the global economy should expand after this year's trough to 3pc in 2014, and to 3.3pc in 2015.

He said:

Growth is not slower because of inadequate demand but rather because, in our view, the very strong growth we saw in the pre-crisis period was due to that bubble phenomenon.

Part of the 'new normal' will be slower growth rates in countries like China, the World Bank said

07.15 Some more reaction to the market sell-off.

Hirokazu Kabeya, senior strategist at Daiwa Securities. said:

We have seen such wild fluctuations lately that few investors want to press on with buying.

It's a kind of a chicken-and-egg situation - volatile markets keep buyers away and the absence of buyers leads to market volatility. We are trapped in a negative spiral right now.

Nikkei 225 in Thursday's trading

07.10 Markets in Asia have slumped in trading on Thursday, after the World Bank cut its global growth forecast.

Japanese stocks dived in to bear territory and Asian shares hit new 2013 lows on Thursday. The dolar also slid to a 10-week low against the yen.

Markets were also rattled at the prospect of reduced stimulus from central banks rattled investors, triggering a broad sell-off from riskier assets.

In Japan the Nikkei 225 is down 6pc and in Hong Kong the Hang Seng is down 3pc.

There’s so much uncertainty on global growth and we’re cashing in on gains we’ve made from being in equities, saving that up for when things stabilize.

Asia markets were also under pressure after US markets closed lower last night, and in so doing post their first three day losing streak this year.

The Dow Jones and S&P 500 both closed down 0.84pc, while the Nasdaq closed down 1.06pc on Wednesday.

This is likely to see Europe’s markets open lower for the fourth day in a row this morning.

Michael Hewson, senior market analyst at CMC Markets notes:

We could see a test of a number of key support levels.

The last time we saw four successive daily declines on the FTSE100 was in April, and on that occasion we bounced off the 6,220 area, which has supported the current rally since early February.

He added:

Despite the fact that it remains unlikely that either the Fed or the Bank of Japan are likely to start reining back on their stimulus measures any time soon, investors appear to have decided that the mere prospect of an exit strategy is enough of a reason to look at pulling money off the table on a fairly comprehensive scale.

This is not the only factor as rising political tensions in Greece as well as the unrest in Turkey has seen investors pull money out of these countries, while European peripheral bond yields have started to edge higher again as the recent rally in Greek, Portuguese, Spanish and Italian debt comes to a sharp halt as investor realise that high yields do not a safe investment make.

Of course there is the other reason is that for all of the stock market gains of recent months investors have finally woken up to the fact that current stock valuations are not supported by fundamentals in the current low growth environment, and all the QE in the world can’t address that particular issue. It certainly makes the upcoming Fed meeting the key event for next week.

Mr Hester, who has run RBS since the height of the financial crisis in November 2008, has been asked to depart to allow the sale of the Government’s 81pc stake in the bank by the end of next year.

He will leave by the end of December despite repeatedly saying that he wanted to see through the privatisation process himself.

But the decision - rubber-stamped by RBS’s board at a meeting in London on Wednesday afternoon - came after the Treasury, led by Chancellor George Osborne, indicated that it wanted to return its stake to private hands by the end of 2014.

The Chancellor is believed to have wanted a new chief executive to lead the privatisation process. One source said that there was “no love lost” between Mr Osborne and Mr Hester.

Sir Philip Hampton, the bank’s chairman, admitted the decision to ask Mr Hester to step down followed a series of discussions with the Treasury.

Nathalie Thomas reports the new owner of Stansted airport has taken the first major step towards reversing six years of decline by striking a deal with low cost airline easyJet to grow passenger numbers.

The Times has reports that plans by the cash-strapped Co-operative Group to create a landmark £800 million development in Manchester’s city centre were dealt a devastating blow yesterday when its developers walked away from the project.